Issue Brief on “Towards Import Substitution: Manufacturing of Consumer items in Special Economic Zones under CPEC”

As activities under China Pakistan Economic Corridor (CPEC) are steadily gathering pace, more goods, both capital and consumer, are being imported from China. It is expected that there will be a sharp rise in the import bills due to the rise in demand for these goods. The government is trying to reduce import of non-essentials items through various plans so that import of machinery and technology (capital goods) can be continued which are considered important for the success of this mega project.

Recently, the Board of Investment (BOI) has devised a comprehensive plan to attract investments in manufacturing consumer goods in the Special Economic Zones (SEZs), to be set up under CPEC. According to the Board, consumer items, most of which are imported from China, stand first in line to be encouraged at the SEZs.[1] The Board officials have started consultations with the respective provinces and other stakeholders in drafting import substitution incentive packages for industries to be set up in these SEZs, which, according to them, will be equally applicable to the local investors.